Electrical Power Systems
A Top Export Prospect for Colombia

Market Estimates

The above statistics are unofficial estimates
Sources: Association of Power Generation Companies, National Planning Department, Energy and Gas Regulatory Commission, Mining and Energy Planning Unit and World Trade Atlas

The Electrical Power Systems market continues to represent an important opportunity for U.S. exporters. The significance will increase as Colombia’s continues to expand its economy, which in turn will drive the demand for more electricity across all industrial sectors.

At the end of 2012, Colombia’s installed electric power generation capacity reached 14,524 MW, up from 13,420 MW in 2011, with a 63.6 percent hydro power share and the remainder 36.4 percent (gas, coal-fired power plants, wind power, and cogeneration facilities). By 2019, the government has forecasted the installed capacity to reach 18,671 MW, with an increased reliance on large-scale hydro.

The Energy and Gas Regulatory Commission (CREG) enacted a “Reliability Charge” that recognizes the availability of generation assets to insure “firm generation capacity - OEF” under critical conditions, becoming a major incentive to develop new power projects in Colombia. Recent power auctions under this new market-oriented mechanism, generated new power plant commitments, mostly hydro-based plants and increasing the share of hydro-based generation (to reach 72 percent) with the incorporation of Porce III and IV, El Quimbo, HidroSogamoso and Pescadero-Ituango, totaling more than 4,000 MW.

Several large Colombian power companies, including Interconexión Eléctrica (ISA), Empresas Públicas de Medellín (EPM), ISAGEN S.A., and Empresa de Energía de Bogotá (EEB) are evaluating expansion projects to other Andean Countries (Bolivia, Ecuador, and Perú) and Central American countries. The proposed power interconnection with Panama could lead to new power projects in Central America.

The Colombian Government is also promoting the use of renewable energy sources, especially for off-grid and isolated areas. Also under development is a regulatory framework to expand the use of energy efficient systems and create awareness for the rational use of energy, including building more cogeneration facilities.

Efforts are underway to promote private ventures in the areas of solar, wind, geothermal, and small-hydro systems. If successful, these projects will allow for the use of energy in sustainable community projects. EPM owns the country’s sole wind power plant (Jepírachi) located in La Guajira. This is a 19.5 MW facility, with financial support from the World Bank’s Prototype Carbon Fund’s greenhouse gas reduction credits. Other electric utilities are interested in pursuing renewable energy projects (mainly wind). Another non-traditional project is the Amoyá run-of-river hydro project that is expected to produce some 80 MW of electricity and additional environmental benefits aimed at protecting the peak areas in the surrounding mountains.

Imports of electric power generation equipment benefit from a favorable peso-U.S. dollar exchange rate; relative proximity of Colombia to the U.S.; and with the implementation on May 12, 2012, of the U.S.-Colombia Trade Promotion Agreement (U.S.-CTPA), Colombia will eliminate import duties for equipment, spare parts, and accessories for this sector.

The outlook for the Colombian electricity sector is promising since the government is planning to develop several new power generation projects, mostly hydro, to accommodate the expanded demand through 2018. Additionally, the government is exploring prospects to become a major exporter of electricity (including goods and services) to the Andean region and Central America.

Some solid business prospects exist as a result of this trend to continue using hydroelectric plants with gas-fueled thermal energy generators, including cogeneration systems. Also, electricity trading and distribution companies are focusing on reducing losses by acquiring leading-edge management and control systems technologies.

Another promising business opportunity is the Rural Energy Program aimed at providing electrical power to off-grid areas using renewable energy systems such as solar, wind, and small and medium scale hydro plants. This program calls for new generation systems and improving existing systems. The government has taken steps to secure funding for the program. This sector will continue to consolidate.

To assist with these government efforts, the U.S. Trade and Development Agency has awarded feasibility study grants for a 50 MW geothermal power plant (ISAGEN), for a 20 MW landfill waste-to-energy facility, and for a proposed solar-wind power project. In addition, USTDA is also supporting the Colombian government’s interest in using SmartGrids technologies.